I Have a High Income But My Credit Is Terrible: Here’s My Advice About Money

Credit report form on a desk with other paperwork.
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Most people in the working world strive for a high income, whether to pursue their dreams, support themselves and their family, or achieve a certain status in life. With that pursuit can come both financial rewards as well as credit problems. OppLoans reported that your “credit score” isn’t concerned with how high your income is but rather your ability to pay back your debts. There’s a misconception that your credit score increases with your income, but the reality is that it’s just not the case.

Expert Opinions Regarding High Income and Bad Credit

I spoke with four experts and posed the following questions:

  1. What brought you to a place of high earnings but also bad credit?
  2. What kind of financial challenges do you currently face as a result?
  3. What advice would you give to people who make a decent wage, but struggle with bad credit?

Here’s what they had to say about their own experiences with a high income and bad credit.

Rapid Business Growth

Eric Lam from Los Angeles, California, Founder of Exploding Ideas, explained that while he is extremely ambitious, with ambition comes the need for more prudent financial decisions.

“I climbed to high earnings by chasing ambitious ventures, often using credit to fuel rapid growth. Success came, but inconsistent cash flows led to missed payments, damaging my credit. Today, I face challenges like stringent loan conditions, unfavorable interest rates and skepticism when negotiating business terms, all due to my credit standing. For those with good wages but poor credit, budget diligently, set aside funds for liabilities, and consider credit repair services. A healthy credit score can be as valuable as a hefty paycheck.”

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Overall, Lam advised that with rapid business growth can come consequences if your steps to financial success aren’t carefully planned for.

Risky Investments

Cameron Heinz from Pendleton, Indiana, CEO of Mobility Nest, said that risky investments and a changing market led to his adverse credit score.

“Initially, ambitious but risky investments in new technologies drove my business revenue, yet unexpected market fluctuations and regulatory changes impacted my credit adversely. Presently, securing favorable financing options has become challenging due to my compromised credit. This limits business expansion and necessitates costly borrowing, leading to constraints on growth opportunities. I suggest prioritizing on creating a meticulous budget and focus on clearing high-interest debts.”

Heinz went on to explain that open communication with creditors for revised payment terms can be beneficial. Exploring alternative financing sources and seeking professional financial guidance can also aid in improving your financial health.

Financing a Business

Billy Parker from Peterborough, England, United Kingdom, Managing Partner of Gift Delivery, said taking on debt to finance a business can come with long-term consequences.

“My current situation is a result of a combination of factors. I have always been a high earner, but I have also had to take on a large amount of debt in order to finance my business. This has resulted in a bad credit score. The financial challenges I face as a result of my bad credit score are numerous. I have to pay higher interest rates on loans, and I am often denied access to credit cards and other financial products. I also have to pay higher insurance premiums, which can be a significant burden. My advice to people who make a decent wage but struggle with bad credit is to focus on paying off their debt as quickly as possible.”

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To further his point, Billy said that it’s important to create a budget and stick to it and to avoid taking on more debt than you can afford to repay. Additionally, it’s important to check your credit

score regularly and dispute any errors that you find.

Being an Entrepreneur

Ron Dewitt from Miami, Florida, President at The Gold Information Network, said that being an entrepreneur can come with its rewards and its risks.

“I’m a lifelong entrepreneur. Being an entrepreneur has its ups and downs. I’ve made a lot of money, but I’ve also taken risks that didn’t work out, leading to financial challenges and hits on my credit score. I’ve dealt with challenges like debt collectors calling, trouble getting loans, and feelings of embarrassment. My advice is that if you’re earning well but struggling with bad credit, don’t get stuck in the past.”  

Dewitt furthered his point by advising that people speak with a lawyer to understand their legal options when it comes to bad credit. “Keep living your life and stay positive. Over time, you can work on fixing your credit,” said Dewitt.

Steps You Can Take To Avoid and Fix Bad Credit

Money.com explains that a “good” credit score is at least 670-739. Here are some steps you can take to avoid bad credit, fix bad credit, and keep your score elevated:

  • Consistently Make On-Time Payments: Consistent, on-time loan and credit card payments exemplify your ability to pay back the money you borrow without issue or delay. This results in a higher overall credit score and can help elevate a lower credit score. 
  • Pay Down Your Outstanding Balances: Paying down your debt is often a fast way to raise your credit score. Paying off accounts in full will result in the loan’s outstanding balance being reported to the credit bureaus as $0. In turn, your credit utilization ratio will reduce which will help you earn a higher score.
  • Don’t Close Old Accounts: It’s the case that the older your accounts and lines of credit are, the deeper your credit history and the higher your credit score. It’s best practice not to close accounts and instead ensure that all accounts are in good standing and paid in full.
  • Avoid Frequent Credit Inquiries: Applying for new loans, credit cards, or other lines of credit always results in the lender pulling your credit history, known as a hard inquiry. It’s best to minimize the number of hard inquiries on your credit history as too many of them make it seem to lenders that you’re desperate for credit, in turn lowering your credit score.
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